In August 2003, the Irish government published a consultation paper on the national implementation of the EU information and consultation Directive, which is likely to have a major impact in Ireland, as it has no general, permanent and statutory system for employee information and consultation. In the consultation paper, the government seeks views from interested parties on a number of key issues related to transposition.
On 11 August 2003, the Minister for Labour Affairs, Frank Fahey, published a consultation paper on how the EU information and consultation Directive (2002/14/EC) (EU0204207F) should be transposed into Irish law. Interested parties had until 24 September 2003 to make submissions to the government, which intends to publish an Information and Consultation of Employees Bill in the summer of 2004, with a view to enactment by March 2005. This is the transposition deadline set by the Directive, though there are transitional arrangements for Member States, such as Ireland, currently without 'general, permanent and statutory' information and consultation systems, allowing these countries to phase in the application of the Directive to smaller undertakings up to March 2008
To some extent, aspects of the consultation paper have been influenced by events related to the transposition process in the UK. In July 2003, the UK government published a consultation document setting out its proposals on implementing the Directive and inviting comments on draft Regulations (UK0307106F). The approach taken by the draft UK Regulations is based on a framework established in discussions between ministers and representatives of the Confederation of British Industry (CBI) and the Trades Union Congress (TUC), who agreed an 'outline scheme' for the implementing legislation which is incorporated in the consultation document. However, it has been argued - notably by Tom Hayes of the Brussels-based industrial relations consultancy, EIRI Associates- that aspects of the UK approach to transposing the Directive could prove to be problematic and/or subject to legal challenge.
Uncharted waters
The implementation of the information and consultation Directive will bring Irish industrial relations into uncharted waters, and marks a further move away from its traditional 'voluntarist' system of industrial relations (IE0106168F). For the first time, large numbers of employers will have to introduce mandatory mechanisms providing workers with a range of information and consultation rights. This will undoubtedly constitute a substantial culture change. European Works Councils (EWCs) have been introduced in a number of Irish-based multinational companies or multinationals based elsewhere with operations in Ireland, but there are currently only limited statutory provisions for information and consultation structures in Ireland, apart from in a few semi-state companies. Accordingly, the new arrangements based on the Directive will be introduced into something of an institutional vacuum. This is particularly so in the case of many non-unionised companies in Ireland, because it is the first time that their employment relations policies will be subject to so much external scrutiny.
The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides the following information and consultation (defined as taking place between the employer and employee representatives) rights: information on the recent and probable development of the undertaking's or the establishment's activities and economic situation; information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations. This implies employee involvement earlier in the decision-making process than provided for by existing Irish consultation procedures on collective redundancies and transfer of undertakings (IE0102230N), which require consultation only after a decision has already been made. Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.
The Directive has deliberately been framed in quite loose and general terms to allow actors considerable flexibility in developing their own voluntary arrangements to suit their particular circumstances. In other words, it is not designed to impose a 'one size fits all' model. In practice, commentators in Ireland believe that this looseness could create uncertainty, and generate differing interpretations by management and trade unions/workers – for instance in drawing the boundaries between information, consultation, and joint decision-making, individual and collective rights, and direct and indirect (through employee representatives) channels.
Opposing approaches
The Irish Business and Employers Confederation (IBEC) is lobbying for what the trade unions would call a 'minimalist' interpretation of the Directive, primarily due to a concern to protect the prerogative to manage. In view of this, employers want to maintain and promote existing forms of direct interaction between management and employees. To a large degree, employer opposition to indirect representative structures has been based on the concern that they could frighten away foreign inward investment by multinationals, many of which are opposed to collective employee representation.
On the trade union side, a key concern, particularly given the decline in union density and difficulties securing recognition in the private sector (IE0102164F), is to maintain, and, indeed, bolster, the traditional 'single channel' of collective representation – ie through trade unions alone.
The task of the Irish government is to balance these competing objectives. The consultation paper invites comments on a number of key issues, examined below, along with the comments of Tom Hayes, a prominent commentator on employee information and consultation issues at Irish and European levels.
Negotiating a framework agreement?
In Article 5, the Directive provides that 'Member States may entrust management and labour at the appropriate level ... with defining freely and at any time through negotiated agreement the practical arrangements for informing and consulting employees.' Furthermore, Article 11 provides that management and labour may introduce the provisions required to implement the Directive in a Member State by way of agreement. As mentioned above, in the UK, the CBI and TUC have negotiated an outline scheme for implementation - the first time that they have concluded a form of 'framework agreement' on transposing EU legislation. It remains to be seen whether the Irish social partners will negotiate a framework agreement along UK lines, or whether, more conventionally, the government will decide the final proposals, albeit on the basis of the social partners’ separate submissions.
Tom Hayes warns that there are potential problems relating to framework agreements to implement the Directive. In particular, he suggests that: 'Given that the legislation will ultimately impact on all undertakings employing at least 50 people the question has to be asked as to whether the social partners are fully representative of all such undertakings?… IBEC, which has been hostile to the directive from the time it was first proposed by the EU Commission, could be tempted to find ways to undermine it in practice while the unions, understandably, might try to use the transposition process as a way of underwriting their own role.'
To avoid this potential for conflicts of interest, Mr Hayes suggests that a 'high level group' (HLG) approach, similar to that adopted to look at the issues of the minimum wage (IE9907140F) and trade union recognition (IE9903135F) in Ireland, would perhaps be a more suitable alternative in the Irish context. These earlier HLGs were not just representative of the social partners, but included representatives from relevant government departments, industrial development agencies and so on. Under this approach, the government is free to make the final decisions on the wording of the legislation.
Undertaking or establishment level?
The Directive gives governments the option of applying its terms to undertakings employing at least 50 people or establishments employing at least 20 people. While it is proposed that the UK provisions will apply to undertakings with 50 or more employees, the Irish Department of Enterprise, Trade and Employment has received submissions in favour of both undertakings and establishments, and no concrete decision has yet been made. In reality, Mr Hayes suggests, there are no 'right answers' here. In a small organisation with relatively simple structures it might make more sense to introduce a single information and consultation body, while in a larger more complex organisation, several information and consultation bodies could be required.
Opt-in or opt-out?
An important issue in the national transposition of the Directive is whether to adopt an 'opt in' in or 'opt-out' approach. 'Opt-in' means that an employer would have to set up an information and consultation structure only if formally asked to do so by a group of employees. By contrast, an 'opt-out' approach means that the employer would be obliged to put a structure in place unless employees make it clear that they are not interested.
According to Mr Hayes, the decision whether to adopt an 'opt in' in or 'opt-out' approach is probably the most critical issue that has to be decided. He himself veers towards favouring the 'opt-out' approach, suggesting that it would be less susceptible to legal challenge. Crucially, 'opt-in' places the onus on workers themselves to initiate the process if interested, while 'opt-out' automatically places the onus on the employer. Mr Hayes argues that it is reasonable to assume that an 'opt-in' approach will produce a slower rate of diffusion of information and consultation structures, given that, in many instances, it will be very difficult for groups of employees to organise themselves collectively to make a request to an employer to establish such structures. This difficulty is likely to be particularly acute in large, dispersed organisations. He states that as the Directive 'imposes an obligation on employers to inform and consult employee representatives it should not be left to employees themselves to ensure that employers meet these obligations'.
The UK has chosen the 'opt-in' approach, in the sense that the process has to be triggered by a formal written request from at least 10% of the undertaking's workforce before an employer has to open negotiations. However, Mr Hayes claims that this may well be found to be in breach of the Directive by the European Court of Justice, because it may be judged to undermine employee access to information and consultation rights. The Irish consultation paper welcomes debate on whether or not to adopt a similar trigger mechanism.
Pre-existing agreements
Management and labour are free to open discussions to establish information and consultation structures before the Directive comes into force, or bring existing provisions into line with the Directive. The consultation paper notes that many organisations in Ireland already claim to have agreements in place providing information and consultation rights. Under Article 5 of the Directive, management and labour at the appropriate level, including at undertaking or establishment level, may define freely and at any time through negotiated agreement the practical arrangements for informing and consulting employees. These agreements, and agreements existing on the Directive's transposition deadline, as well as any subsequent renewals of such agreements, may establish - while respecting the principles set out in the Directive's Article 1 and subject to conditions and limitations laid down by the Member States - information and consultation provisions which differ from those laid down in the Directive.
The word 'agreements' in the Directive appears to assume that there has been negotiation between independent parties. In reality, however, few Irish organisations are likely to have genuine information and consultation 'agreements' already in place that fully match the requirements of the Directive – particularly non-union workplaces, where the emphasis often tends to be on direct information channels designed unilaterally by management, without significant employee participation. A number of studies have confirmed that this is the case. With this in mind, the consultation paper suggests the Irish legislation will require that the following formalities will have to be met to ensure that pre-existing agreements conform to the Directive: the information and consultation arrangements must be effective; the agreement must apply to the entire workforce; the agreement must be in writing and available for inspection; and employees must have agreed to continue the existing arrangements without alteration.
Minimum requirements for negotiated agreements
In the absence of a pre-existing agreement, actors may wait until March 2005, when the Directive comes into force, and begin negotiating an information and consultation agreements then. As in the UK, a timescale of six months has been proposed in the Irish consultation paper for negotiating such agreements in workplaces. The consultation paper states that negotiated agreements must provide for genuine employee participation in the design process, and must take the following factors into account: the arrangements must be effective; they must take due account of the interests of both the enterprise and employees; they must have due regard to the rights and obligations of both parties; they must be negotiated and operated in a spirit of cooperation; and where the agreement is - as the consultation paper suggests is permissible - for an 'arrangement of direct involvement' (ie where there is direct interaction between the employer and the employees), employees must be free at a later stage to exercise their right to consultation through representatives of their choice.
Fall-back provisions
In instances where no pre-existing agreement is in place, or where the parties fail to introduce a negotiated agreement, then standard 'fall-back' rules, based on Article 4 of the Directive (which prescribes the subjects and mechanisms of information and consultation), will come into force within a specified period – possibly six months. The consultation paper proposes that these rules should require the creation of an 'employees' forum', and set out the competence, composition, procedure and functions of such a forum. The paper notes that the Second Schedule of the Transnational Information and Consultation of Employees Act 1996- which implemented the EU EWCs Directive (94/45/EC) in Ireland - could serve as a template for the employees’ forum.
Defining employee representatives
Under the terms of the Directive, 'employee representatives' have the role of acting on behalf of the employees in the course of negotiations for an agreement on information and consultation, and of acting in a representative capacity if the fall-back provisions come into play.. The consultation paper states that the definitions of 'employee representative' in the Transnational Information and Consultation of Employees Act 1996 may be important in this context. This defines employee representatives as:
(a) in the case of a special negotiating body, persons elected or appointed to that body, who may include (i) employees, and (ii) trade union officials and officials of an excepted body, whether or not they are employees, and (b) in the case of a European Works Council or European Employees’ Forum, or in relation to any other arrangement for the information and consultation of employees to which this Act applies, employees elected or appointed to those bodies or for the purposes of those arrangements.
A key implementation issue on the trade union side is to bolster the traditional 'single channel' of employee representation – ie through trade unions alone. In practice, however, they could face some difficulty in this regard, given that the Directive itself does not give trade unions an automatic guarantee that they will be the sole employee representative channel. In practice, this should not present too much of a problem in workplaces where unions are strongly established and management is used to dealing with them. However, difficulties are perhaps more likely to arise at non-union sites, partially unionised sites (for instance, where there are union members, but recognition has not been granted), or in unionised sites where management wants to bypass unions. For these reasons, commentators believe that the Directive could prove to be something of a 'double-edged sword' for the trade union movement, and there is a possibility that information and consultation arrangements could become 'snarled up' with the union representation agenda. The strategy of the union movement, in terms of whether they view the new information and consultation provisions as an opportunity to rebuild their organising capacity in the private sector or, alternatively, as a threat to their representativeness, is not entirely clear.
Role of experts
The consultation paper seeks views about the role of outside experts, such as trade union officials. Although Article 6 of the Directive (on confidentiality) is the only place where there is specific mention of a role for outside expertise, the paper states that it is nonetheless implicit in the text that both employers and workers may call on expert assistance where required - for instance, to help with training.
Enforcement
The Department of Enterprise, Trade and Employment is seeking views as to whether Ireland's existing third-party dispute resolution institutions – the Labour Relations Commission and the Labour Court– or a newly created body (or bodies) should handle disputes under the legislation implementing the information and consultation Directive.
Commentary
The changes resulting from the implementation of the EU information and consultation Directive will bring Irish industrial relations into uncharted waters. In addition to having to balance the different priorities of employers, trade unions, and other interested parties, the Irish government will have to one eye on the potential legal implications that may arise from the Directive. In particular, the decision whether to adopt an 'opt-in' or 'opt-out' approach – in other words whether the onus should be on the employees or employer to trigger information and consultation structures – is possibly one of the most crucial issues. An 'opt-in' approach could result in legal challenges down the line, if the courts judge that it is being used to undermine worker access to information and consultation as a basic right. (Tony Dobbins, IRN)